Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): July 31, 2012

 

 

U.S. Silica Holdings, Inc.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware   001-35416   26-3718801

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

8490 Progress Drive, Suite 300, Frederick, MD   21701
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (301) 682-0600

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 2.02 Results of Operations and Financial Condition.

On July 31, 2012, U.S. Silica Holdings, Inc. issued a press release providing information regarding earnings for the second quarter ended June 30, 2012. A copy of the press release is attached hereto as Exhibit 99.1.

The information including Exhibit 99.1, in this Form 8-K is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section. The information in this Form 8-K shall not be incorporated by reference into any filing under the Securities Act of 1933, except as shall otherwise be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits. The following exhibit is furnished herewith:

 

99.1    U.S. Silica Holdings, Inc. press release dated July 31, 2012


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

    U.S. Silica Holdings, Inc.
   

/s/ WILLIAM A. WHITE

    Name:   William A. White
    Title:   Chief Financial Officer

Date: July 31, 2012


EXHIBIT INDEX

 

Exhibit

Number

  

Description

99.1    Press Release of U.S. Silica Holdings, Inc. dated July 31, 2012
Press Release

Exhibit 99.1

U.S. Silica Holdings, Inc. Announces Second Quarter 2012 Results

Company’s Two Business Units Deliver Solid Performance

Frederick, MD, July 31, 2012 (BUSINESS WIRE) – U.S. Silica Holdings, Inc. (NYSE: SLCA) today announced net income of $19.5 million, or $0.37 per basic share and $0.36 per diluted share for the quarter ended June 30, 2012, compared with net income of $6.4 million, or $0.13 per basic and diluted share for the same period in 2011.

Summary Financial and Operating Data

 

     Three Months Ended June 30,  

($ in millions except statistics and per share)

   2012     2011  

Key Operating Statistics:

    

Tons Sold: (000s)

    

Oil & Gas

     685.0        535.1   

Industrial & Specialty Products

     1,098.4        1,105.6   
  

 

 

   

 

 

 

Total

     1,783.4        1,640.7   

Income:

    

Revenue

   $ 104.6      $ 74.1   

Contribution Margin

   $ 47.3      $ 31.5   

% Margin

     45.2     42.6

Adjusted EBITDA (a)

   $ 37.1      $ 26.4   

% Margin

     35.5     35.7

Net Income

   $ 19.5      $ 6.4   

EPS, Basic

   $ 0.37      $ 0.13   

EPS, Diluted

   $ 0.36      $ 0.13   

 

         (a)

A reconciliation of Adjusted EBITDA, a non-GAAP financial measure, to net income, the most comparable GAAP measure, and other important information appears on page 6.

Bryan Shinn, President and Chief Executive Officer said “I’m pleased that for the second quarter of 2012, U.S. Silica again delivered strong financial results, in line with the high-end of the guidance range provided in our last earnings release. We are very satisfied with these results. Our performance underscores the value of U.S. Silica’s business model – which balances the upside growth potential in unconventional drilling with highly stable industrial markets.”

The Company reported second quarter 2012 revenues of $104.6 million, an increase of $30.5 million, or 41% from the $74.1 million reported for the same period in 2011. Overall sales volume increased to nearly 1.8 million tons, or over 8% above the prior year sales volume of 1.6 million tons.

The Oil and Gas Proppants segment was the primary driver of year-over-year revenue growth. Second quarter Oil and Gas revenues were $54.5 million – up 111 percent compared to second quarter of 2011. The Company sold 685,000 tons of sand into the Oil and Gas markets for hydraulic fracturing, which produced $33.3 million in contribution margin for the second quarter, compared to 535,000 tons and a contribution margin of $16.7 million in the second quarter of 2011.

 

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Second quarter Industrial and Specialty Products segment revenues were $50.1 million, a year-over-year increase of approximately 4%. The ISP segment sold 1,098,000 tons and delivered $14.0 million in contribution margin, compared to 1,106,000 million tons and a contribution margin of $14.8 million in the second quarter of 2011.

The ISP business segment represents the heritage of U.S. Silica and provides the Company a balanced portfolio of markets and customers. The ISP segment has more than 1,400 customers, produces over 200 products to such diverse end-markets as glass containers, flat glass, paint, chemicals and electronics.

SG&A expense was $9.7 million for the second quarter of 2012 compared to $6.0 million for the second quarter of 2011. The increase was driven by additional staffing to support our growth and the administrative requirements of a public company.

Adjusted EBITDA for the second quarter of 2012 was $37.1 million, an increase of 40% compared to $26.4 million for the second quarter of 2011.

Capital Update

As of June 30, 2012, we had $102.6 million of cash and cash equivalents and $24.0 million available under our credit facilities. Our total outstanding debt was $260.6 million. Capital spending for the first half of 2012 was $39 million.

In June 2012, we announced a stock repurchase program of up to $25 million over the next 18 months. As of the end of the second quarter, we had repurchased 20,000 shares for slightly over $200,000 and are treating these shares as treasury stock.

Outlook and Guidance

The Company expects full year revenues of approximately $395 million to $415 million and reaffirms Adjusted EBITDA of $142 million to $150 million, with the most likely outcome to be in the lower half of the range.

Conference Call

U.S. Silica will host a conference call for investors today, July 31, 2012 at 10:00 a.m. Eastern Time to discuss these results. Hosting the call will be Bryan A. Shinn, President and Chief Executive Officer, and William A. White, Chief Financial Officer.

The call can be accessed live over the telephone by dialing (877) 705-6003, or for international callers, (201) 493-6725. A replay will be available shortly after the call and can be accessed by dialing (877) 870-5176, or for international callers, (858) 384-5517. The passcode for the replay is 397401. A webcast of the call can be accessed by visiting the Company’s website at www.ussilica.com. A replay of the webcast will also be available for approximately two weeks following the call.

 

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About U.S. Silica Holdings, Inc.

U.S. Silica Holdings, Inc., a Delaware corporation, is the second largest domestic producer of commercial silica, a specialized mineral that is a critical input into the oil and gas proppants end market. The Company also processes ground and unground silica sand for a variety of industrial and specialty products end markets such as glass, fiberglass, foundry molds, municipal filtration and recreational uses. During its 112-year history, U.S. Silica Holdings, Inc. has developed core competencies in mining, processing, logistics and materials science that enable it to produce and cost-effectively deliver over 200 products to customers across these end markets. U.S. Silica Holdings, Inc. is headquartered in Frederick, Maryland.

Forward-Looking Statements

Certain statements in this press release are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and speak only as of this date. Forward-looking statements include any statement that does not directly relate to any historical or current fact and may include, but are not limited to, statements regarding U.S. Silica’s growth opportunities, strategy, future financial results, forecasts, projections, plans and capital expenditures, and the commercial silica industry. Forward-looking statements are based on our current expectations and assumptions, which may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Among these factors are (1) fluctuations in demand for commercial silica; (2) the cyclical nature of our customers’ businesses; (3) operating risks that are beyond our control; (4) federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing; (5) our ability to implement our capacity expansion plans within our current timetable and budget; (6) loss of, or reduction in, business from our largest customers; (7) increasing costs or a lack of dependability or availability of transportation services or infrastructure; (8) our substantial indebtedness and pension obligations; (9) our ability to attract and retain key personnel; (10) silica-related health issues and corresponding litigation; (11) seasonal and severe weather conditions; and (12) extensive and evolving environmental, mining, health and safety, licensing, reclamation and other regulation (and changes in their enforcement or interpretation). Additional information concerning these and other factors can be found in U.S. Silica’s filings with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

CONTACT: U.S. Silica Holdings, Inc., Telephone: 855-SILICA-7 (855-745-4227), Email: IR@ussilica.com

 

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U.S. SILICA HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

 

     Three Months Ended June 30,  
     2012     2011  
     (in thousands, except per share amounts)  

Sales

   $ 104,599      $ 74,080   

Cost of goods sold (excluding depreciation, depletion and amortization)

     58,920        42,629   

Operating expenses

    

Selling, general and administrative

     9,718        5,952   

Advisory fees to parent

     —          313   

Depreciation, depletion and amortization

     5,974        5,252   
  

 

 

   

 

 

 
     15,692        11,517   
  

 

 

   

 

 

 

Operating income

     29,987        19,934   

Other (expense) income

    

Interest expense

     (3,428     (5,224

Early extinguishment of debt

     —          (6,043

Other income, net, including interest income

     179        163   
  

 

 

   

 

 

 
     (3,249     (11,104
  

 

 

   

 

 

 

Income before income taxes

     26,738        8,830   

Income tax (expense) benefit

     (7,287     (2,474
  

 

 

   

 

 

 

Net income

   $ 19,451      $ 6,356   
  

 

 

   

 

 

 

Earnings per share:

    

Basic

   $ 0.37      $ 0.13   

Diluted

   $ 0.36      $ 0.13   

 

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U.S. SILICA HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

 

    

  June 30,  

2012

         

December 31,

2011

 
     (in thousands)  
ASSETS   

Current Assets:

        

Cash and cash equivalents

   $ 102,625          $ 59,199   

Accounts receivable, net

     49,904            46,600   

Inventories, net

     40,131            29,307   

Prepaid expenses and other current assets

     7,165            8,561   

Deferred income taxes, net

     20,424            28,007   

Income tax receivable

     —              3,895   
  

 

 

       

 

 

 

Total current assets

     220,249            175,569   
  

 

 

       

 

 

 

Property, plant and mine development, net

     363,828            336,788   

Debt issuance costs, net

     2,348            1,291   

Goodwill

     68,403            68,403   

Trade names

     10,436            10,436   

Customer relationships, net

     6,737            6,942   

Other assets

     6,458            6,367   
  

 

 

       

 

 

 

Total assets

   $ 678,459          $ 605,796   
  

 

 

       

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY   

Current Liabilities:

        

Book overdraft

   $ 4,028          $ 5,588   

Accounts payable

     37,588            36,579   

Accrued liabilities

     8,620            9,875   

Accrued interest

     86            1,659   

Current portion of long-term debt

     6,364            6,364   

Income tax payable

     7,223            —     

Current portion of deferred revenue

     8,081            10,393   
  

 

 

       

 

 

 

Total current liabilities

     71,990            70,458   
  

 

 

       

 

 

 

Long-term debt

     254,209            255,425   

Note payable to parent

     —              15,000   

Liability for pension and other post-retirement benefits

     49,190            52,078   

Deferred revenue

     899            2,128   

Deferred income taxes, net

     69,489            75,915   

Other long-term obligations

     13,420            12,858   
  

 

 

       

 

 

 

Total liabilities

     459,197            483,862   

Commitments and contingencies

        

Stockholders’ Equity:

        

Common stock

     529            500   

Preferred stock

     —              —     

Additional paid-in capital

     162,085            103,757   

Retained earnings (accumulated deficit)

     68,602            30,038   

Treasury stock, at cost

     (215         —     

Accumulated other comprehensive loss

     (11,739         (12,361
  

 

 

       

 

 

 

Total stockholders’ equity

     219,262            121,934   
  

 

 

       

 

 

 

Total liabilities and stockholders’ equity

   $ 678,459          $ 605,796   
  

 

 

       

 

 

 

 

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Non-GAAP Financial Measures

Adjusted EBITDA

Adjusted EBITDA is not a measure of our financial performance or liquidity under GAAP and should not be considered as an alternative to net income as a measure of operating performance, cash flows from operating activities as a measure of liquidity or any other performance measure derived in accordance with GAAP. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Adjusted EBITDA contains certain other limitations, including the failure to reflect our cash expenditures, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized, and excludes certain non-recurring charges that may recur in the future. Management compensates for these limitations by relying primarily on our GAAP results and by using Adjusted EBITDA only supplementally. Our measure of Adjusted EBITDA is not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation.

The following table sets forth a reconciliation of net income, the most directly comparable GAAP financial measure, to Adjusted EBITDA.

 

     Three Months Ended June 30,  
     2012      2011  
     (in thousands)  

Net income

   $ 19,451       $ 6,356   

Total interest expense, net of interest income

     3,383         5,217   

Provision for taxes (benefit)

     7,287         2,474   

Total depreciation, depletion and amortization expenses

     5,974         5,252   
  

 

 

    

 

 

 

EBITDA

     36,095         19,299   

Non-recurring expenses (income) (1)

     —           —     

Transaction expenses (2)

     —           6,043   

Permitted management fees and expenses (3)

     —           312   

Non-cash incentive compensation (4)

     493         54   

Post-employment expenses (excluding service costs) (5)

     404         628   

Other adjustments allowable under our existing credit agreements (6)

     120         94   
  

 

 

    

 

 

 

Adjusted EBITDA

   $ 37,112       $ 26,430   
  

 

 

    

 

 

 

 

  (1)

Includes the gain on the sale of assets.

  (2)

Includes fees and expenses related to the January 27, 2012 amendment of our Term Loan Facility and ABL Facility.

  (3)

Includes fees and expense paid to Golden Gate Capital for ongoing consulting and management services provided pursuant to an Advisory Agreement entered into in connection with the Golden Gate Capital Acquisition; this Advisory Agreement was terminated in connection with our IPO.

  (4)

Includes vesting of incentive equity compensation issued to our employees.

  (5)

Includes net pension cost and net post-retirement cost relating to pension and other post-retirement benefit obligations during the applicable period, but in each case excluding the service cost relating to benefits earned during such period.

  (6)

Reflects miscellaneous adjustments permitted under our existing credit agreements, including such items as expenses related to reviewing growth initiatives and potential acquisitions.

 

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